In 1913 production of stainless steel in the world was only a few tonnes. It reached0.6 Mt in 1938 and increased to about 2.5Mt in 1963. It crossed the 10Mt mark in 1986.Today the stainless steel production has increased to 38.1 million metric tonnes for FY2013-14 (preliminary figures). With the exception of Western Europe and Africa allregions achieved positive growth. China alone accounted for 46% growth.
While world stainless steel production registered a CAGR of 5% during the period1962-2013 it was China which led the charge with a CAGR of 15%. The Indian stainlesssteel production registered a CAGR of around 8% during the same period.
I am also happy to announce that your company's overall sales saw an increase of 13% inthis financial year. Volumes crossed the 1 million mt mark this year. Our strong salespush in hitherto less penetrated market segments like nuclear power industrial processindustries oil & gas and kitchenware segments in domestic market contributedsignificantly to this growth.
Global Stainless Steel scenario
The global crude Stainless Steel production during 2013 was 38.1 million ton over 2012production of 35.4 million ton registering a growth of 7.6%. Over the past five yearsStainless Steel production has shifted from Western Economies to the Asian Economies withChina accounting for almost 50% of the World's production today. This has been possible onaccount of numerous protection and subsidies offered by the Chinese Government to itsstainless steel industry. As per Heinz H. Pariser's Metal & Markets research duringChina's current five year plan (2011-15) Stainless steel production capacity is scheduledto be further extended to 30 million tonnes from current level of around 19 milliontonnes.
Indian Stainless Steel Scenario
Today with a crude stainless steel production of 3 mmt India ranks as the thirdlargest producer and second largest consumer of Stainless Steel. The market for 2013-14was at 2.5 mmt of which Flat products accounted for approx 2 mmt. With a low per capitaconsumption of 2.1 kg (as against the world average of ~5 kgs) there lies a huge potentialfor future growth. While there is a scope for growth slowdown in sectors such asInfrastructure Railways Seaports Airports Highways and Bridges etc. have been majorobstacles in growth of Stainless Steel. The problems have got compounded on account ofhumongous increase in imports coming in from China. Over the past 5 years imports fromChina have gone up by close to 700%. Apart from dumping activities large scalecircumvention of import duties is also rampant.
But with new government promising to focus on growth of domestic manufacturing and onthe infrastructure sector we are hopeful that the demand for Stainless Steel should alsoget a boost.
Business Highlights (Standalone)
JSL's (Standalone) gross revenue for the financial year ended 31st March 2014 at Rs12942 crore as against Rs 11091 crore in fy 12-13 has been highest ever a growth of17% year-on-year mainly due to increased volume of sales at the new plant at Jajpur.Exports sales surged to Rs 3482 crore from Rs 3220 crore in fy 12-13 with year-on-yeargrowth of 8% and Domestic sales grew by 20% to Rs 9460 crore from Rs 7871 crore in fy12-13.
Profit before depreciation interest and taxes stood at Rs 886 crore as against Rs 615crore in fy 12-13. Net profit/ (loss) stood at Rs (1390) crore as compared to Rs (821)crore mainly on account of Interest cost of ^1235 crore in comparison to Rs 990 crore infy 12-13 and exceptional loss of Rs 417 crore as compared to Rs 167 crore in fy 12-13. Theincrease in Interest is mainly on account of conversion of some of the Foreign Currencyborrowings into Rupee borrowings. This was an exceptionally challenging year for JSL onaccount of tough economic conditions both Indian and Global steep and sharp depreciationof rupee against dollar and adverse industry dynamics. However the company was able toachieve good progress in ramping up of Jajpur plant and achieve the highest ever sales andfurther expects to gain from this state of art plant in the years to come.
I take a lot of comfort from the knowledge that over the past three decades StainlessSteel has grown by 5.32% annually while most of the other metals (carbon steel zincAluminium etc) have grown by just 2.5% to 3%. True compared to some of the other metalsstainless steel is far younger in age and it is exactly on account of this that thegrowth in stainless steel will continue to outpace other metals for a long time.
Your company has initiated strategic growth plans in both domestic and internationalmarkets and
has made investments towards capacity expansions through forward and backwardintegration. Ever since the onset of severe recessionary conditions internationally ithas become important to have thrust in the Domestic Market. We are therefore focusing onimproving our domestic market share further and have accordingly allocated 75% of ourproduction for the domestic market and the remaining 25% is being exported to strategicmarkets.
Special drive has been organized in hitherto untapped segments like elevators pumpsplumbing sugar rice and petrochemical industries etc.
Development of new grades like 444 445 446 and/or special finishes byincreasing capacities; improving upon technical know-how and/or adding necessaryequipments is the firmis growth plan.
Approvals and registration for the newly developed products/grades with domesticand international organizations is key focus area.
In order to introduce the benefits of stainless steel in more and more segmentsparallel developmental activities for applications of stainless steels for productscurrently in other material / grades are being carried out. Thuswe feel will help in abig way to expand our markets.
Before I conclude I would like to take this opportunity to thank all our stakeholderswho have given their support trust and faith in us as lenders investors analysts andmedia.
I would also like to thank our employees the management team the directors on theboard for their unwavering support during the challenging times.
I extend my sincere thanks to all our customers for their continued loyalty.
Chairman & Managing Director